Price Briefing: Lithium prices “expected to be flat” for 2013, says FMC while rare earths dip

By Siobhan Lismore-Scott
Published: Monday, 03 June 2013

Soda ash price increase expected, while bromine prices slide lower

Lithium prices have attracted some attention of late. This is mainly due to some market participants claiming that 2013 will be a “flat year” for pricing, while others have told IM that supply has fallen off, causing prices to lift.

Lithium leader FMC Corp. said during a conference call in May that it believed demand would remain at around 10% CAGR for lithium.

Lithium demand is expected to increase, but 2013 “is a flat year for pricing,” CEO Pierre Brondeau said.

“In terms of pricing 2013 is a year of flat pricing. There is not much change on the market today, and we have stability,” he told investors during a webcast.

The company revealed in its results that as well as a planned outage in the third quarter of this year at its lithium plant in Argentina, it will also be closing down in Q2 2013.

Elsewhere, Brondeau said that it expects growth for electric vehicles to take off post 2015, which will also increase lithium demand.

“We are seeing the growth for EV Ñ if it takes off Ñ to take off post 2015. And it’s a bit slower than what most companies would have said one or two years ago,” he specified, adding that “there is no significant change or increase in pace in this market today”.

Growth, from an energy standpoint, will more likely be driven by electronic devices than it is by electric vehicles, Brondeau added.



Soda ash

Brondeau also said a price increase in soda ash is expected in Q3 2013.

The CEO said he saw some demand recovery in flat glass markets in China, but not in North America.

“Despite the fact that Chinese GDP is not as robust as what we were expecting, some of the (...) leading markets for soda ash are showing strength. And we’re talking about the automotive industry, as well as the flat glass industry,” Brondeau explained.

Referencing the recent $30/tonne increase on non-contract and contract sales of soda ash made by ANSAC at the beginning of April, Brondeau said that this was a move to increase prices to Asia.

“ANSAC and all of the members of ANSAC have decided on a price increase for Asia of [$30/tonne],” he said.

Contracts for soda ash are becoming more liquid and moving away from a quarterly model, he added.

“We are confirming, and our people on the ground over there have confirmed, that the Chinese producer[s] (...) are not giving three month contracts anymore. We just confirmed that. We had a team flying out to Asia last week. They’re only going with monthly supply, which usually is a very good indication,” he added.

Indeed, at the beginning of April ANSAC said that its growth in sales volume over the last few years had started to outpace its ability to load and ship tonnes “in the reliable manner we deem essential”.

“Organic growth and buyers moving to us for our service and reliability has resulted in almost 1m tonnes of growth from 2011 to 2013” ANSAC CEO John Andrews said at the time.

Bromine

Chinese chemical manufacturer Gulf Resources Inc. reported a fall in net income to $1.9m for Q1 2013, down from $3.3m for the same quarter a year ago in May.

The bromine, crude salt and speciality chemical producer highlighted a 9% drop in bromine prices year-on-year (y-o-y) as a key reason behind the decline.

“Due to the lower demand [for] bromine as influenced by continuing macroeconomic tightening policy imposed by the Chinese government, the average selling price of bromine decreased from $3,560/tonne for the first quarter [of] 2012 to $3,053/tonne for the same period this year,” CEO Liu Xiaobin said.

“We reported lower operating performance in this quarter in comparison to the same period of last year, as we were unable to offset the decreasing revenue of [the] bromine segment by [increasing revenues from the] crude salt and chemical products segments,” he added.

Liu also blamed cold weather at the start of the year and a lull in Chinese economic activity over the Chinese New Year for the figures, but noted that Q1 2013 bromine prices had increased from Q4 2012 levels of $2,954/tonne, indicating an increase in demand.

When asked during the post-earnings conference call about future movements in the price of bromine, Liu said that he expected the price to increase slowly over the next six months.

In January, Gulf forecast that average selling prices of bromide would increase during 2013, and that the company’s business performance would grow 30% y-o-y, assuming China’s attempts at stimulating domestic economic growth are successful.

Bromine compounds are principally used in flame retardants incorporated into household plastics and fabrics, as well as to make clear brines for the oil drilling industry.

Iodine prices: soft but steady

TSX-listed iodine producer Sirocco Mining Inc. also reported that prices for iodine were 15% lower during the first three months of 2013 than those seen in the corresponding period in 2012.

Prices paid for the company’s sales of 217 tonnes iodine averaged $55/kg, compared to $65/kg a year ago.

The company said that its latest set of results had been negatively affected by iodine sales deferred to Q2 2013 owing to a March port strike in Chile; reduced iodine prices; and high exploration costs.

Commenting on the results, Sirocco CEO, Rick Clark, said: “Production [of 363 tonnes] in Q1 2013 was very strong, a 29% improvement over Q4 2012. Gross profits as a percentage of sales also improved in Q1 2013 compared to the last quarter in 2012, notwithstanding a decrease in iodine prices from the all time highs achieved in 2012.”

Sirocco’s report on the iodine prices support views on recent trends observed in the market more widely.

US-based iodine company Iofina plc. reported a 16% increase in revenues at the beginning of May, and said that prices for iodine were holding steady.

One South American producer recently told IM that combined spot and contract prices for iodine (crystal, 99.5% min, delivered Europe or US) were between $60-70/kg, although this has been unsupported by pricing contacts elsewhere.

A Europe-based sources said that there was significant variation in the iodine market at present.

ÊAlthough European source acknowledged the possibility that pockets of higher pricing existed, they doubted whether IM’s ranges of $59-65/kg for spot, and combined spot and contract; or $59-62 for contract orders, were being realised across the board.

A report released in April by UK-based Roskill Information Services stated that iodine prices had continued to soften in the first quarter of 2013, dropping to around 11.5% below Q1 2012 levels.

The report speculated that this decline may have resulted from production rising at a higher rate than consumption, adding that prices may decrease further through 2013 if production targets are reached, and demand rises at a rate of 3.5% per annum, as forecast.

If this does occur, by Q1 2014, contract prices may be 10% below Q1 2013 levels, after which Roskill notes that prices are forecast to rise progressively at a low rate until 2017.

Rare earths

Some individual rare earth prices slipped sharply again in May, with indexes tracking the mineral reporting an average 15% decline in the price of neodymium oxide (IM price: $75-$80/kg) and cerium oxide (IM price: $8-%11/kg).

Prices for Europium oxide have fallen almost 6% (IM price: $1470-$1670/kg), while dysprosium oxide weakened by 3% (IM price: $56-$800/kg).

Rare earth carbonate prices are reported to be firmer, however, with prices remaining broadly flat in recent weeks, according to market sources.

In early May, China’s vice-minister for industry, Su Bo, blamed the price weakness partly on illegal rare earths production and smuggling, practices which Su said were contributing to a supply glut and distorting both domestic and international prices.